Sweden after the Swedish Model From Tutorial State to Enabling State Mauricio Rojas Sweden after the Swedish Model From Tutorial State to Enabling State Mauricio Rojas Copyright © Mauricio Rojas and Timbro publishers 1996, 1998 and 2005 English translation: photocopying, recording or otherwise), without Roger Tanner and Cristina Edbrooke the prior written permission of both the copyright owner and the publisher of this book. © Illustration: Monica Mullor Mauricio Rojas is a Member of Parliament for the Part One was first published in English as The Swedish Liberal Party. He was born in Chile in Rise and Fall of the Swedish Model by The Social 1950, came to Sweden in 1974, and has published Market Foundation, in 1998 in association with widely on immigrant problems and development Profile Books Ltd. Part Two and the Statistical issues. He is Associate Professor in the Depart- Appendix were originally published in Spanish in ment of Economic History at Lund University and 2005 by CADAL (Buenos Aires) as Suecia después Senior Adviser at Timbro. del modelo sueco. All rights reserved. Without limiting the rights may 2005 under copyright reserved above, no part of this isbn 91-7566-589-1 publication may be reproduced, stored or intro- timbro, box 5234, se-102 45 stockholm duced into a retrieval system, or transmitted, in tel +46-8-587 898 00, fax +46-8-587 898 55 any form or by any means (electronic, mechanical, [email protected], www.timbro.se Contents Introduction 4 PART I: THE RISE OF FOLKHEMMET From Peasant Power to Industrial Breakthrough 7 Continuity and Change in Swedish History 6; Historical Roots 8; Modernisation and Industrial Breakthrough 13. Folkhemmet Triumphant 21 With the Tide – folkhemmet’s Foundation 27; The Decades of Hegemony 33. Folkhemmet Defeated 45 Against the Tide – the Storm Clouds of the Sixties 45; The Swan Song of folkhemmet 50. PART II: SWEDEN AFTER THE SWEDISH MODEL From Tutorial State to Enabling State 58 Introduction 58; Origins and Growth of the Welfare State 59; The Mature Tutorial State’s Problems 61; The Welfare State Crisis 63. Towards the Enabling State and a Welfare Society 66 Unresolved Economic Problems 69; The Great Dilemmas of the Future 72. Notes 75 Statistical Appendix 79 Bibliography 89 To Mónica with kisses and red roses Introduction Few social experiments have caught the imagination of politicians and students of political economy like the ‘Swedish model’. To successive generations of the centre left searching for their own “Third Way” Sweden was something of a paradise. This exotic Nordic country was a kind of real-life Utopia, an idyllic country, full of beautiful people with a Social Democratic government which worked, a nation combining high rates of economic growth with unprecedented levels of equality. This was a view largely shared by the Swedes themselves. For 50 years or so after the 1930’s, it really appeared that you could have it all, a high rate of growth, low levels of unemployment and an unparalleled system of social welfare. But the Swedish model was not to survive the challenges that new times and its own development were to raise. At the beginning of the 1990’s, after almost two decades of increasing problems, the Swedish Model collapsed. A difficult time of high unemployment and fiscal crisis became the every- day reality of the Swedes. This was a mortifying experience for a people that for many decades had known nothing of that kind. Confusion was widespread, but even the Swedish clouds have a silver lining. In the middle of the deepest crisis the country had experienced since the beginning of the 1930’s, rethinking and reappraisal ensued. This was the start of a quite amazing process of change that is transforming Sweden, leaving behind the old monopolistic tutorial state1 and opening the gates to a welfare society in which the state is no more the patronising state of the past but what I would like to call an enabling state, open to civic initiatives, individual choice, and cooperation with the private sector. Part one of this book tells the saga of the rise and fall of the Swedish model or folkhemmet, which is the word commonly used in Sweden for what foreigners call the Swedish mo- del. Folkhemmet – literally a combination of folk (people) and hem (home) – was a unique attempt to create an all-embracing Welfare State, which substituted the security of the tutorial state for the old, traditional ties of family and community. Looking back at history, I try to explain the factors which made folkhemmet and an overwhelming Social Democratic hegemony possible in Sweden, and which ultimately led to the demise of both, as well as to our current period of social and political renewal. The main argument here is that folk- hemmet was more of a bridge than a break in Swedish history. It offered continuity during a time of rapid change brought on by modernisation. Its main power lay in its ability to in- tertwine the past with the future, in its promise to preserve Sweden’s distinctive traditions while exploiting the material prosperity of the industrial era. That is why the subsequent crisis of folkhemmet and Social Democracy represented more than simply the failure of a particular political project. It has had a profound effect on Sweden’s national identity, on our most deeply rooted traditions and dreams, and on the heritage of centuries. 4 This part of the present work was written in the mid-1990’s, when the economic crisis was very deep and the clouds in the Swedish sky were very dark. Part two, written only a year ago and updated for this publication, is about Sweden after the collapse of folkhemmet or the Swedish model. It summarises the transformation that the country has been expe- riencing during the last decade or so as a way to cope with the debacle of the old Swedish model. As the reader will see, amazing things are taking place in Sweden. Many important problems are still there, but the search for a new “Swedish model” has been intensive and in many senses very inspiring to anyone interested in learning about how to build up a fair society with high levels of diversity and individual freedom. The challenges to come are many, but today we can be more confident than we could on the day after the dismal demise of folkhemmet. At the end of this book the reader will find a commented Statistical Appendix that gives a summary of some important aspects of the recent development of Sweden. 5 PART I: THE RISE OF FOLKHEMMET From Peasant Power to Industrial Breakthrough CONTINUITY AND CHANGE IN SWEDISH HISTORY As an industrial nation, Sweden was uniquely successful. Industrialisation came relatively late to the country but was all the more intensive when it arrived. Between 1870 and 1950, Sweden had the highest economic growth rate in the Western world. This opened the way to a dramatic growth of prosperity that would go on accelerating until the beginning of the 1970’s. For centuries, poverty had been a hallmark of Sweden, but in a short space of time the country became a by-word for affluence. With industrialisation came rapid urban growth and a thorough transformation of norms and values, lifestyles, the political system and cultural preferences. Every nook and cranny of Swedish life was modernised with the aid of reason and social planners. An ancient, poverty-ridden agrarian nation was turned into a dazzling industrial welfare nation that rapidly became a model for the world. This is one way of looking at the development of modern Sweden. It is a story of radical discontinuity; a break in history that saw the country completely transformed by a mixture of industrial dynamism and social-reforming zeal. Seen like this, the crisis of the Swedish model is explained by the straitened circumstances of industry combined with, or related to, the excesses of social reform. This reading of modern Swedish history captures some vital aspects of the country’s development over the past century, but it leaves out so much more. For a deeper understanding of the rise and fall of folkhemmet one has to look beyond the superficial discontinuities to the continuity beneath. The central feature of Sweden in general and of folkhemmet in particular, is that both have rested on a bedrock of particular traditions and inherited attitudes. It was this unique heritage that paved the way for the unparalleled political hegemony of Social Democracy. And this same heritage made the Sweden of folkhemmet, even as early as the 1930’s, a distinctive third way between the divisive individualism of capitalism and the totalitarian collectivism of communism. The ‘People’s Home’ is, then, much more of a bridge than a break in Sweden’s develop- ment. Its roots can be traced a long way back in time, and with them a great deal of the overwhelming strength and popular support of folkhemmet. Its irresistible attraction lay in its capacity for intertwining the past with the future, tradition with renewal, the fra- grance of green fields with the glow of city lights. It appealed to the collective heritage of an ancient agrarian people, while offering them a life of material prosperity that only the industrial era could provide. Folkhemmet certainly drew ideological strength from modern industrial utopias. However it was based as deeply on the egalitarian and solidaristic ideals 7 of the rural estates, the paternalistic order of the old mining and manufacturing commu- nity known as the bruk, and on the idiosyncratic relationship between rulers and the ruled which lay deep in Sweden’s history.